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Consider a hypothetical economy where there are no taxes and no international trade. Households spend $0.75 of each additional dollar they cam and save the remaining $0.25. If there are no taxes and no international trade, the oversimplified multiplies for this economy is Suppose investment spending in this economy decreases by $100 billion. The decrease in investment wil lead to a decrease In menme, generating a decrease in consumption that decreases income yet again, and so on. Fill in the following table to show the impact of the change in investment spending on the first two rounds of consumption spending and. eventually, on total output and income. Change in Investment Spending - -$100 billion First Change in Consumption = 5 billion Second Change in Consumption = Total Change in Output = bilion 1.1111 Now consider a more realistic case. Specifically, assun multiplier will be the oversimplifies 3.0769 government in our hypothetical economy collects income taxes. In this case, the you found earlier. Suppose that the price level in our economy remains and that there is still no international trade Now, however, the government decides to 1.0811 Implement an income tax of 10% on each dollar of inc MPC and MPS, however, remain the same as before. In this case, after accounting for the impact of taxes, the multiplier in this economy is and a $190 billion decrease in investment spending will lead to a billion In output